The European Central Bank’s mandate allows it to fight excessive borrowing costs for eurozone countries, Mario Draghi said yesterday, sparking a market rally amid hopes the bank would intervene to buy sovereign bonds.

The euro strengthened and the bond prices of debt issued by stressed eurozone countries rallied after the ECB president told a conference that the bank was “ready to do whatever it takes” to preserve the single currency. “Believe me, it will be enough.”

Following days of market turmoil and concern that Spain’s high borrowing costs could force it to seek a full sovereign bailout, Mr Draghi suggested the ECB had a remit to intervene if market interest rates were not “inherent” to borrowers and interfered with the central bank’s implementation of monetary policy.